On a Contract of Insurance

(Thomas P. Joseph, Advovate, Kottayam)

Insurance is a contract of indemnity whereby, the promisor - called the insurer - undertakes to indemnify the promisee - called the insured - against all sums the later is held liable to pay in respect of risks covered by the policy of insurance. The rights and liabilities of the parties to such a contract has mainly to be decided in accordance with the terms and conditions in the policy of insurance. The provisions of Chapter VIII of the Motor Vehicles Act, 1939, make it obligatory on the part of the owner of a motor vehicle to insure his vehicle against death or bodily injury to third parties. The Certificate of insurance is to be issued in Form A set out in the schedule to the Motor Vehicles (Third party Insurance) Rules, 1946. Chapter VIII of the Act also prescribes the minimum requirements a policy should necessarily contain.

A Division Bench of the Kerala High Court in 'Oriental Insurance Co. Ltd. v. Sivan' reported in 1989 (2) KLT 897 has held that the word 'date of commencement' appearing in form A referred above is synonimous with 'day of commencement' and holding that the word, 'day' means 'the whole or any part of period of 24 hours from midnight to midnight'; has taken the view that even if the policy contains a clause that the risk under it would commence with effect from 11 a.m. on 15-7-1985, the risk would commence from the midnight of 14-7-1985.

True, that Form A contains the words, 'date of commencement' and 'date of expiry'. But there is nothing in the Motor Vehicles Act or the Motor Vehicles (Third -party-Insurance) Rules, which prescribes a minimum period for a contract of insurance. As in the case of ordinary contracts, the parties to a contract of insurance are also free to incorporate in the contract, terms and conditions mutually agreed to by them concerning their respective rights and liabilities, subject of course to the minimum requirements which a policy should have as per the provisions of the Motor Vehicles Act. If so, is it not possible for the contracting parties to specify in the policy of insurance  that the rights and liabilities they have under the policy would commence from a specified time on a particular day? If the view of a Division Bench is accepted, the contracting parties would not be able to do so, even though they wish to do so. This, so far as such specification of time of commencement of risk is not repugnant to any of the provisions of law, will in effect, curtail the rights of the contracting parties. In 'Oriental Insurance Co. Ltd. v. Sivan', the policy did contain a clause that the risk under the policy of insurance would commence with effect from 11 A.M. on 15-7-1985. In this connection, it is useful to refer to a few decisions on the point.

In 'United India Fire & General Insurance Co. Ltd. v. Srinivasan & Others' (reported in 1980 ACJ 413), a Division Bench of the Madras High Court, holding the insurer liable under the policy, in respect of an accident that occurred a few hours before the actual issuance of the policy, said: ".......we are, therefore of the opinion that the appellant, insurance company is liable under the Contract of lnsurance and that it is not possible to accept the contention that the risk in this case has commenced only from the time of issue of the policy of insurance.........". The Supreme Court of India, in a recently reported decision (1990 (1) KLT 817) has also held that the policy taken during any part of the day becomes operative from the commencement of that day. The Supreme Court has also relied on the decision of the Allahabad High Court reported in AIR 1983 All. 87. where again it was not a case where the time of commencement of risk was mentioned in the policy. It has however to be remembered, going through the facts of those cases that the policies in question did not contain any specification concerning the time of commencement of the risk. As such, it was open to the Court to interpret the words 'date of commencement' and hold that the insurer is liable to cover the risk involved in that case.

In 'Jaikishandas v. Chiruthai Ammal and others' (reported in 1984 ACJ 530) where the accident had occurred "at or about 10 a.m. on 30-9-1976", and where also the policy did not contain any specification as to the time of commencement of risk, the Division Bench of the Madras High Court, relying on 1980 ACJ 413, held in para.3 of the Judgment thus: ".........Therefore, we will proceed to consider the legal question on the basis that the proposal form was sent on 30th September, 1976, sometime after 10-30 a.m. and the acceptance was also subsequent to the accident. But, as seen from the original insurance policy produced, which does not mention anything about the time, the period of insurance covered is from 30th September 1976 to 29th September, 1977. Clearly, therefore, the policy shall be deemed to cover from the midnight of 29/30th September, 1976, which will cover the time of accident, also......" (underline supplied). It has to be noted that the Division Bench held so, because the policy had not contained anything about the time from which the risk covered by it commenced. Commenting on similar facts, the Madras High Court in 'Srinivasan v. Rajalakshmi & Others' reported in AIR 1975 Mad. 263, held in para.5 of its Judgment; "...........It is open to the Company to have stated that the contract would be effective from 11a.m. on 6-6-1969 upto 11 a.m. on 6-6-1970, in which case it could certainly escape liability for an accident which had taken place a few hours before the conclusion of the contract..........". In para.6 A of the judgment, the Court again held: ".........It was open to the Insurance Company to have stipulated that the contract would come into force only from 11 a.m. on that day. Instead of doing so, the insurance company has undertaken to cover any risk for the entirety of the year.........".The observations above referred make it clear that it is open to the insurer to specify in the policy of insurance the time from which the risk under it would commence and that in that case, the insurer cannot be held liable with respect to an accident that occurred prior to such time specified in the policy. In short, if the parties to a contract of insurance have chosen to contract between them that the risk under it shall commence from a specified time on a particular day, there is no real scope for entering into an interpretation of the Form of the certificate and then hold that the policy would be effective not merely from the time specified, but from the previous midnight of that day. This is so because, it is not for courts to interpret and make a new contract for the parties which they might not even have thought of. The Supreme Court in "General lnsurance Society Ltd. v. Chandmull Jain" (AIR 1966 SC 1644) said thus:.............In interpreting documents relating to a contract of insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however reasonable, if the parties have not made it themselves........The incipient terms and conditions of the contract later merge in the policy and the terms and conditions become express.......". The view adopted may create anomalies also. A contract of insurance requires utmost good faith from the contracting parties. Assume a situation where immediately after an accident, the owner, whether or not aware of the accident - and probably even before a criminal case is registered, concerning the accident -- gets his vehicle insured and the insurer on its part specifies the time from which the risk covered under the policy is to commence which is after the time of accident, should in that case also the insurer be held liable? When the policy contains the time of commencement of risk, the words "effective date of commencement" used in 'Form A' can only mean the effective time from which the risk covered under the policy is to commence. The shorter Oxford English Dictionary (Vol.1) defines the word, 'date' thus: "1. The specification of time (and often place) of execution of a writing or inscription, affixed to it: 2. The precise time at which anything takes place or is to take place". In Venkata Ramaiya's 'Law Lexicon', 2nd Edn., Vol.1, defining word 'day', it is thus stated: "The term 'day' is used in more senses than one. A day is strictly the period of time which begins with one midnight and ends with the next. It may also denote any period of 24 hours and it may denote the period of time between sunrise and sunset. (Halsbury's Laws of England, 3rd Edn., Vol. 37 at P.84)". The above decisions, it appears, were not brought to the notice of the Division Bench, while deciding "Oriental Insurance Co. Ltd. v. Sivan'. The words, "Effective date of commencement....." in form A does not, therefore, in any way derogate from the intention of the parties to a contract of insurance, as expressed in the policy, specifying the time of commencement of risk covered under the policy. The correctness of the decision in Sivan's case was challenged in "United India Insurance Co. Ltd. v. Gopinathan" (reported in 1990 (1) KLT 713) also on the ground that the interpretation of the Division Bench in "Sivan's case' would deprive the vehicle owners of the incentive to insure their vehicles against third party risks. The Division Bench (see para.4 of 1990 (1) KLT 713) though was of the view that the argument required consideration, did not refer those cases to a larger bench as they could be disposed of without that point. A decision by a larger bench, in the circumstances, would be useful to settle the controversy.

Note on 'Editor's Note' (1990 (1) KLT 903)

(Thomas P. Joseph, Advocate, Kottayam)

The Editor of the Kerala Law Times, while reporting the decision of the Supreme Court in 'Unni v. Nirmala Industries' (reported in 1990(1) KLT 903) has made a note that in the light of the decision of the Supreme Court, the decision of the Kerala High Court reported in 1990(1) KLT 596 is not good law. The Supreme Court, in the reported decision has held that the time for making the deposit for setting aside the sale at the instance of the judgment debtor, is 30 days from the date of sale as provided under Order 21 Rule 92(2) of the Code of Civil Procedure, though the time limit for making such an application is 60 days in view of Article 127 of the Limitation Act, 1963, as amended by C.P.C. (Amendment) Act 1976 (104 of 1976). The Division Bench decision of the Kerala High Court-1990(1) KLT 596-- is to the effect that the deposit made after 30 days but within 60 days of the sale is valid and that the Amendment to Rule 92(2) is retrospective. The editor of the KLT says that in the light of the Supreme Court decision 1990 (1) KLT 596 is not good law.

A close study of the above decisions as well as the concerned provisions would show that the editor's note is incorrect. The decision in 1990 (1) KLT 596 is not at all affected by the decision of the Supreme Court.

It has to be noted that the decision of the Supreme Court was made on an appeal that arose from the judgment of the Madras High Court (reported in 1987 (2) MLJ 3V The Supreme Court was considering the provisions of Article 127 of the Limitation Act, 1963, as amended by Act 104 of 1976 (whereby the period of "Thirty days" prescribed for making application to set aside the sale including an application by the J.D. was substituted by the period of "Sixty days".) and Order 21 Rule 92(2), CPC, amended by the High Court of Madras. The time provided by the said Rule as applicable to the High Court of Madras was 'thirty days' from the date of sale. Construing the provisions, the Supreme Court has held -rejecting the argument that the two provision are inconsistent as the two provisions prescribe different periods of limitation -- that there is no inconsistency between the two provisions, and that since the legislative intent is clear from the explicit and unambiguous words, there is little scope for any interpretation. The Supreme Court has also given its approval to the decision reported in AIR 1982 Ker. 126.

The time limit for deposit of the amount in the case of an application under Rule 89, as far as we are concerned, is 60 days from the date of sale, in view of the Kerala Amendment to Order 21 Rule 92(2) (Amendment dated 8.10.1987 and published Kerala Gazette No.6 dated 9.2.1988). The amendment was made to make the time for deposit, corresponding to the time for making the application under Art.127 of the Limitation Act (by the amendment made to that article as per Act 104 of 1976). In 1990 (1) KLT 596, the Kerala High Court was considering effect of the Kerala Amendment to Rule 92 (2). The Court held that the amendment made is only declaratory and therefore the same would take effect retrospectively. In holding so, the Court also held that AIR 1982 Ker. 126 (which has been approved by the Supreme Court in 1990 (1) KLT 903) is not good law. It has however to be noted that the decision in AIR 1982 Ker. 126 related to the unamended provision in Rule 92(2) which provided for 'Thirty days time for deposit. The Court also noticed (See para.1 of AIR 1982 Ker. 126) that "it is a very clear case of omission on the part of the Legislature to notice that a period corresponding to the period specified in Article 127 had to be stipulated as a period within which deposit is to be made in the provision in Order 21, Rule 92(2) of the Code......" As the function of the Court was to interpret law as it is made, the Court held that the time for deposit was 'thirty days'. The Supreme Court has approved the said decision because, in the case it was deciding also, the time for deposit was only thirty days as provided under Rule 92(2). In other words, the Supreme Court was not at all considering the Kerala Amendment to Rule 92(2) of the Code and whether the said amendment is retrospective.

As far as the provisions of Rule 92(2) of the Code as amended by C.P.C. Amendment dated 8.10.87 as applicable to Kerala is concerned, the decision in 1990 (1) KLT596 stands good and there is no conflict with the decision of the Supreme Court reported in 1990 (1) KLT 903.

High Court v. C.A.T.

(K. Kanakachandran, Industrial Tribunal)

Many ripples are being created now on account of the conflicting versions given on the powers and jurisdiction of Central Administrative Tribunals. The latest decisions rendered by a learned Judge of the Kerala High Court in Mony v. Union of India (1990 (II) KLT 216) and Ernakulam Bench of the Central Administrative Tribunal reported as Case No. 1 in 1990 (II) KLT are in highly conflicting terms. The litigants and lawyers are equally in confusion now. My attempt here is to highlight some more issues which are of topical importance.

If we go through the provisions contained in the Administrative Tribunal Act 1985 (For short AT Act) it can be seen that statute makers had also contributed a bit for the creation of these types of controversies. It appears, the law makers failed to anticipate the possible misreading of the provision regarding the assumption of powers which were exercised by the High Court immediately before the coming into force of the AT Act in relation to matters specified in S. 14 and 15.

By the Forty Second Amendment to the Constitution, Articles 323-A and 323-B were incorporated making provisions for constitution of various Tribunals for adjudicating service matters and certain other matters. Article 323-Aof the Constitution empowers the Parliament to enact laws for giving exclusive jurisdiction to the Administrative Tribunals for adjudicating all disputes and complaints with respect to recruitment and conditions of service of person appointed to public services. Art.323(A)(2)(d) empowers the Parliament to make laws for excluding the jurisdiction of all courts except the Supreme Court. Strictly in terms of those objectives, AT Act was enacted by the Parliament in 1985. The S.14 of the AT Act says that all jurisdiction, powers and authority exercised by all courts except the Supreme Court shall be exercised by the Central Administrative Tribunals. The provision contained in S.28 specifically excludes the jurisdiction of all courts except Supreme Court, Industrial Tribunals and Labour Courts. On account of this specific exclusion clause, the powers exercised by the High Courts under Article 226 and 227 of the Constitution on the matters specified in S.14 and 15 of the AT Act are taken away. The change effected only means that High Court will not have any jurisdiction and power to deal with any of the matters specified in S.14 and S.15 of the AT Act even by exercising the constitutional powers vested in it under Articles 226 and 227 of the Constitution. But, it does not mean that the Central Administrative Tribunals constituted by the Central Government will automatically get constitutional powers also conferred exclusively on the High Court through Arts.226 and 227 of the constitution of India. It also does not mean the inherent powers vested in the High Court under S.115 of the Civil Procedure Code will be similarly vested in the Administrative Tribunal. The decision tendered by the Ernakulam Bench of the Administrative Tribunal is on the assumption that the extra ordinary jurisdiction conferred on the High Court under Article 226 of the Constitution is also transferred to the Central Administrative Tribunal by S.14 of the AT Act. This is the real issue leading to the present controversy.

By invoking Art.226 of the Constitution, the High Court can issue various writs in the nature of certiorari, mandamus, quo warranto etc. when there is error or illegality in the exercise of powers by an authority coming under the definition of 'State'. The powers vested in the High Court under Art.226 of the Constitution were rather undefined and unlimited till the 42nd Amendment to the Constitution. But, through Art.323(A) and 323(B) of the Constitution, the Parliament and State are empowered to make laws restricting the powers of all courts including the constitutional powers of High Court in respect of matters specified in such legislations. The bar imposed on the High Court is only that it shall not exercise any of the powers which are to be exclusively exercised by Administrative Tribunals. However if there is usurpation of powers, even against acts of Administrative Tribunals, writs in the nature of quo warranto or prohibition can be issued by the High Courts. Restrictions in the exercise of powers and jurisdiction by the High Courts are only confined to the matters specified in S. 14 and 15 of AT Act and not on other matters.

In the original AT Act, all the Courts except the Supreme Court were barred from adjudicating any of the matters coming within the jurisdiction of Administrative Tribunals. By the subsequent amendment to S.28 of the AT Act, the Industrial Tribunal, Labour Court or any authority constituted under the Industrial Dispute Act 1947 or any corresponding law for the time being in force are also empowered to exercise any jurisdiction, powers or authority on matters exclusively conferred to the Administrative Tribunals. Therefore the position is that any person who will come under the definition of 'workman' in the Industrial Dispute Act 1947 or any other corresponding law for the time being in force can approach not only the Industrial Tribunal or Labour Court but even the Administrative Tribunal also for the redressel of grievances it relation to service matters.

All the employees connected with the affairs of the Union or of any State or of any local or other authority will not come within the definition of 'workmen' in the Industrial Dispute Act. Only a few section of the employees will come under that definition. The intention of the amendment to S.28 might be that those employees who would come within the definition of 'workmen' could resort to remedies provided in the I.D. Act also instead of seeking remedies through the Administrative Tribunals. Thus it is purely the option of the employee concerned to choose any of the forums. That is why concurrent jurisdiction is conferred on Administrative Tribunals, Industrial Tribunals and labour Courts. What the legislature had intended can also only be like that. Nowhere in the AT Act it is stated that the Administrative Tribunal will have appellate or superintending powers over the Industrial Tribunals and Labour Courts. It does have only concurrent powers to exercise. So long as there is no confernment of constitutional power under Art. 227 to the Central Administrative Tribunal, such Tribunal cannot hold the view that it does have superintending powers over Industrial Tribunals and Labour Courts as in the manner the High Court has. It's source of power is only through the provision contained in AT Act and not through the Constitution of India. The Central Administrative Tribunal can exercise powers under Art. 227 only when there is specific provision in the Constitution itself.

Now, in terms of power conferred under Art.227, the High Court is exercising Superintending power on all Courts and Tribunals. So long as the Industrial Tribunals and Labour Courts are creation of Industrial Dispute Act, 1947 or other corresponding law for the time being in force, the Superintending power of the High Court under Art.227 will continue. This position will change only when the Industrial Tribunals are appointed in terms of the law which may be enacted by the concerned legislatures by invoking Art.323-B of the Constitution and provision is also made therein for the exclusion of jurisdiction of High Court as in the manner it is done in the AT Act. Thus the position emerges is that as the matters stand now, only the High Court will have power of judicial review on the awards and orders which will be passed by the Industrial Tribunals and Labour Courts. The Industrial Tribunals and Labour Courts are in no way authorities subordinate to or under the control of the Central Administrative Tribunal so long as there no specific provision for that in the AT Act. In the height of this controversy, it is up to the Apex court of this country to lay down the correct position in law. Till that comes, the present chaos will continue.

Advocate Commissioners

(By Prakash Ramanathan, Advocate, Manjeri)

Every civil lawyer at some point in his practice is sure to have experienced the crucial influence that an Advocate Commissioner appointed by Court has had on the progress and ultimate out-come of suits, especially in matters where emergent reliefs are sought or where very substantial property/easement rights are involved and where a correct plan is essential to judicious disposal of issues.

In actual practice however the fact is that young lawyers fresh out of Law Colleges are usually appointed as Advocate Commissioners even though they may not have any idea of what exactly their role is nor how to go about its effective execution.

It is therefore suggested that the syllabi of legal education (perhaps in the final year) be modified to include a capsule course on all aspects of Commission work including the rudiments of survey techniques and preparation of plans which would go a long way in furthering the rights and interests of genuine litigants.

Is the Supreme Court without a Chief Justice?

(By Varghese Vattakkav, Advocate, Vaikom)

A particular Bar Association was conducting a condolence meeting on the demise of Mr. Justice Sabyasachi Mukharji, the Chief Justice. In the course of the resolution passed by the meeting, which was to be sent to the Registrar of the Supreme Court of India, a minute problem arose among the members- The expression "The Chief Justice of the Supreme Court of India" or "the Chief Justice of India" is to be used.

What did the provision say? Article 124 of the Constitution of India reads:-"The establishment and constitution of the Supreme Court --(1) There shall be a Supreme Court of India, consisting of a Chief Justice of India, and Parliament by law prescribe a larger number of.................other judges."

The provision says that (1) there shall be a Supreme Court of India. (2) There shall be a Chief Justice of India (and not a Chief Justice of the Supreme Court of India) and other Judges (of the Supreme Court, or India? -- the provision is silent). Can a Chief Justice or any other Judge exist without a Court? The term 'Chief Justice of India' indicates a Court and not a country, independently from a Court, is not it?

The very intention of Article 124 of the Constitution, seems to me that the expression "the Chief Justice of India", is to be meant "the Chief Justice of the Supreme Court of India" and "other Judges of the Supreme Court". The mere expression "the Chief Justice of India" is not apt in the provision, in the strict sense. Let me humbly place it before the learned Jurists of the Country.